Supply Chain Management Tutorial | Creation era

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The term “supply chain management” was first coined by Keith Oliver in 1982. Oliver defined in 1982 the Supply Chain concept as follows: -“Supply chain management (SCM) is the process of planning, implementing, and controlling the operations of the supply chain with the purpose to satisfy customer requirements as efficiently as possible. Supply chain management spans all movement and storage of raw materials, work-in-process inventory, and finished goods from point-of-origin to point-of-consumption”. Since then, almost all Supply Chain Book authors have developed their own definitions. Some of them are subtle variations and others add more detail, but most of them remain close to Oliver’s original definition. A 2003 article in a Strategy+Business Issue named When Will Supply Chain Management Grow Up? by Tim Laseter and Keith Oliver himself describes anecdotically the moment in which the term Supply Chain Management was coined prior to the Financial Times interview: Oliver began to develop a vision to tear down the functional silos inside an organization (manufacturing, marketing, distribution, sales and finance). He and his team called it Integrated Inventory Management, abbreviated I2M in the late 70’s. They believed that the term was catchy and the I2M acronym would be well received, but it all changed during a key steering committee meeting with Dutch electronics giant Philips. At the meeting, he and his team found out that their catchy phrase was not that catchy, and Oliver was challenged by one of the customer’s managers: Mr. Van t’Hoff. Oliver explained Mr. Van t’Hoff what he meant by I2M: “We’re talking about the management of a chain of supply as though it were a single entity,” Mr. Oliver replied, ―not a group of disparate functions.” “Then why don’t you call it that?” Mr. Van t’Hoff said. “Call it what?” Mr. Oliver asked. “Total supply chain management.” Scott Stephens, Former Chair of the Supply-Chain Council (SCC) (1983–1997) and Former Chief Technology Officer of the SCC (1997–2005) states in his blog that after knowing the story, he was not really sure if it was Keith Oliver or Mr. Van t’Hoff who coined the term. But as Oliver developed the concept prior to the meeting and used it first in public during the Financial Times interview, gives credit to Oliver’s story to be the Ring of Truth. However, the concept of a supply chain in management was of great importance long before, in the early 20th century, especially with the creation of the assembly line. The characteristics of this era of supply chain management include the need for large-scale changes, re-engineering, downsizing driven by cost reduction programs, and widespread attention to Japanese management practices.

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